Investor Relations Activities Research Articles

Exploring the Relationship between Economic Indicators, Investor Distrust, and Stock Market Volatility: case study of the KASE index dynamics

Object: The aim of the article is to investigate the relationship between investor distrust and the overall financial stability of the Kazakhstan Stock Exchange (KASE) through a comprehensive analysis of qualitative and quantitative methods. Methods: Qualitative analysis involves examining the activities of KASE and investor relations practices, while quantitative analysis employs regression modeling to explore the impact of macroeconomic factors on KASE index volatility. Findings: In the research varying levels of investor engagement and investor relations activities in Kazakhstan were revealed with significant correlations between macroeconomic indicators such as inflation, unemployment, GDP, and KASE index volatility. Results indicate that while inflation and GDP have limited impact, unemployment significantly influences market volatility, leading to the fact that investors less actively participate in the market activities in terms of poor economic conditions. Conclusions: Insufficient investor confidence, influenced by macroeconomic conditions and financial literacy, hinders the growth of the stock market. Building trust among investors requires transparent regulations, effective governance, and investor education initiatives to foster market participation and development.

Do media message receivers asymmetrically react to non-strategic and strategic media coverage? Evidence from Hong Kong

This study decomposes media coverage into a non-strategic (random news) component and a strategic component backed by investor relations (IR) activities. Conceptually, media message receivers, including analysts and investors, asymmetrically react to non-strategic and strategic media coverage if their reactions to strategic media coverage are biased. Therefore, their reactions to non-strategic media coverage provide a benchmark of unbiased actions for empirically identifying the upward bias, if any, in their reactions to strategic media coverage. Using a sample of Hong Kong firms that provides unique data on IR activities, this study finds that analyst following and forecast error are unbiased in response to strategic media coverage. However, investors’ actions are biased upward in response to strategic media coverage, whose positive impact is over 50% stronger than that of non-strategic media coverage on stock performance and institutional ownership. Moreover, investors heavily discount the strategic media coverage of firms with high information asymmetry.

Pandemic public health interventions and corporate communications: Evidence from China

We investigate the impact of government public health interventions on corporate communications in this study. Based on a large quarterly sample of Chinese listed firms, we find firms respond positively to the growing information needs during the pandemic mainly through the promotion of online communications, despite government public health restrictions hindering offline investor relations activities significantly. Also, several firm characteristics including industry, financial constraints, and information asymmetry mediate the relationship between government restriction and different forms of communication. Overall, our paper provides evidence on how firms’ communications evolved in response to public health interventions.

Investor relations activities and insider trading: Evidence from China

This paper examines the impact of investor relations (IR) activities involving different market participants on the listed firms’ insiders’ information acquisition and informed trading behavior. Using IR activities data of SZSE-listed firms from July 2012 to December 2021, we find that it seems that IR activities with insider trading have higher information content, especially those involving the participation of sell-side analysts or mutual fund managers. By properly timing trades according to their foreknowledge of these activities, insiders can significantly improve their returns. Our results highlight that the sell-side analysts and mutual fund managers play the crucial roles in facilitating insiders’ informed trading.

Investor relations and investment efficiency

AbstractA rich literature suggests that investor relations officers (IROs) fulfill a one‐way information intermediary role by transmitting firm information to investors. We advance this literature with empirical evidence suggesting IROs are two‐way information intermediaries who also return investment efficiency‐increasing investor feedback to firm insiders. Exploiting granular investor relations activity data for 1,375 global firms, we document that firm investment efficiency is higher when IROs spend more time with existing institutional investors, conduct more institutional investor outreach, and meet more often with investment professionals (market intelligence collection), and when IROs transmit investment community feedback to board directors (market intelligence circulation). We mitigate endogeneity concerns stemming from our association tests by employing an expansive suite of control variables, a high‐dimensional fixed‐effects structure, an entropy‐balanced estimation sample, and an instrumental variables analysis. Our evidence supports theory predicting that managers learn about investment opportunities and their costs and benefits from investors and informs a literature predominantly characterizing IROs as one‐way information intermediaries.

The value of communication: Evidence from in‐depth investor relations management data

AbstractThis study investigated the value of investor communication in a firm's market valuations. The higher the frequency of communication and degree of investor involvement, the greater the increase in firm value. This effect is more prominent in companies with less information transparency, more volatile performance, and investor relations officers holding multiple executive positions and are highly experienced. Furthermore, investor relations (IR) activities can affect market valuations, including liquidity, market visibility, and institutional holdings. This study provided a new approach to measuring IR management and practical implications for governments to actively encourage companies to improve IR.

Case of Indonesia: government bond issuer investor relations strategy

<span lang="EN-US">This study elaborates Indonesia's investor relations activities in building and maintaining positive perceptions of the Indonesian economy as a debt issuer in international financial markets. The study begins with several theories in investor relations, communication strategies, and investor relations current practices in Indonesia. By referring to various theories related to investor relations, an assessment is carried out that focuses on strengthening efforts in preparing the framework for the communication strategy of investor relations in the Republic of Indonesia. In addition, this study also aims to produce a communication strategy framework that can be applied in preparing sharper, focused, and goal-oriented work programs and communication strategies. This study resulted in a framework for strengthening investor relations strategies in Indonesia which have taken into account factors according to investor relations theory and the strategic environment that has become the concern of the international financial community.</span>

Investor Relations and Corporate Communications (IRSC) and Cost of Debt and Equity Capital

In this study, we examine whether firms’ engagement in Investor Relations and Stakeholder Communication (IRSC) activities reduce the cost of information asymmetry at the time of external financing. We also analyze the intermediary role of financing source (debt vs equity) and the existing level of firm transparency. Measures of IRSC initiatives are frequency of press releases, frequency of events (conferences and meetings, including industry gatherings as well as investment bank seminars), ratio of question and answer portion to the length of events, the average length of answer per question asked during events, and the frequency of slides used in event presentations. Sample includes 1,190 firms listed on S&P1500 index (small, medium, and large-cap firms on NYSE, AMEX, and NASDAQ stock exchanges) from 1999 to 2018. Multiple regression analyses (with robust standard errors) show that press frequency and the portion of question and answer in events have a significant and positive relationship with the cost of financing and event frequency and the average length of answers have a negative association with the cost of financing. Multivariate multiple regression analyses (seemingly unrelated regression models) are used to control for simultaneous effects of debt and equity issue and show that these findings are more pronounced for firms of lower transparency who are going to issue equity compared to firms of higher transparency who are going to issue debt.

Do KOSDAQ-Listed Korean Firms’ Overseas and Domestic Investor Relations Activities Contribute to Higher Firm Values?

Do KOSDAQ-Listed Korean Firms’ Overseas and Domestic Investor Relations Activities Contribute to Higher Firm Values?

The Economic Consequences of Investor Relations: A Global Perspective

We offer new evidence on the economic value of investor relations (IR) activity using the results of a 2012 global survey of IR officers and their activities. More active IR programs, as measured by a firm’s involvement in broker-sponsored conferences, in facilitating one-on-one meetings with institutional investors, through global outreach, and with formal disclosure, media and governance policies, are associated with a statistically significant and economically large 12% higher Tobin’s q valuation ratio. The findings are resilient to concerns about potential reverse-causality as we instrument the level of IR activity with firm-level constraints, or of their peers, with novel data on IR personnel, salaries, and budgets. The channels through which IR activity increases market value is through greater analyst following, improved analyst forecast accuracy, and a lower cost of capital. We evaluate competing theories of information disclosure for capital market outcomes by exploiting our new data on firm disclosure and investor engagement strategies.

Characteristics of Firms that Buy Voluntary Disclosure: Evidence from Open Briefings

Firms increasingly can choose to disclose news through a variety of channels. The study of alternative disclosure channels can provide insights into not just why firms disclose, but why they disclose using different methods. This paper focuses on a unique disclosure option for Australian firms, called Open Briefings. Open Briefings are question and answer documents that are announced on the Australian Stock Exchange. Firms pay Orient Capital, an investor relations consultant, to hold one and are motivated to disclose via Open Briefings as they serve to heighten the attention and effectiveness of disclosure. We find that Open Briefing firms are more likely to be loss making, in the resource sector, younger, have a greater dispersion of share ownership, make more market announcements, have greater director independence and are likelier to issue equity after the Open Briefing. We add to the voluntary disclosure literature by finding that both mature and growth firms use attention increasing disclosure (investor relations activities) when they have reasons to do so. Furthermore, Open Briefings are useful for firms to supplement existing firm coverage. We also document the characteristics of firms that hold different types of Open Briefings. This adds to our understanding of voluntary disclosure by providing insight into the types of firm using Open Briefings and the reasons for doing so.

Investor Relations Activities in Taiwan

Presentation on investor relations (IR) activities in Taiwan, propose best practices, and services available for the Taiwan stock market. We propose increasing transparency and improvement of English language materials as a best practice for listed companies. Also presents a few case studies on IR activities of listed Taiwanese companies, shareholder structure, and share price performance.

Perceptions and attitudes toward corporate website presence and its use in investor relations in the Jordanian context

This study reports the results of semi-structured interviews conducted to explore the factors affecting Jordanian listed firms' decisions on whether or not to have a corporate website and, if so, whether or not to use it in investor relations activities. Corporate interviewees noted that the decision to have an online presence was motivated by a desire to enhance the company's image and reputation, and the need to re-brand the company was often a key event triggering website adoption. Particularly important here were international influences, whether international partners, shareholders or competitors. However, in all cases, top management support was essential and played a key role in influencing the ways in which companies use their website both in general and for investor relations activities in particular. Results also revealed that the key factor explaining the lack of a corporate website was the attitude or belief of management. Of key importance was their belief that stakeholders, including Jordanian stock market participants, are not yet ready or willing to use the internet to acquire information about the company. Some interviewees similarly concluded that there is no demand for investor relations information on corporate websites because the Jordanian Securities Commission publishes all listed companies' annual reports on its own website. Other factors explaining the lack of a corporate website were management change, absence of competition and having been listed on the Jordanian stock exchange for a long period. This research extends our understanding of disclosure on the internet by considering a different research setting, namely Jordan, and also by extending the theoretical framework used.

The Determinants Of Web-Based Investor Relations Activities By Companies Operating In Emerging Economies: The Case Of Jordan

Using a multi-theoretical approach, this study seeks to examine the determinants of corporate web-based investor relations (IR) activities for companies listed on Amman Stock Exchange. Jordan provides an interesting context to pursue the objectives of this study because it provides insights into how listed companies are voluntarily responding to recent government and financial market regulators initiatives to encourage the use of the internet and to keep financial market participants informed about corporate activities. A survey analysis is conducted to examine online reporting practices of Jordanian listed companies. The explanatory analysis relies on logistic, ranked and normal scores ordinary least squares (OLS) regression analyses and identifies ten explanatory variables that may affect the existence and level of web-based IR disclosure; company size, profitability, government ownership, institutional ownership, number of shareholders, growth prospects, age, industry type, auditor type, and equity need. Results reveal that the existence of web sites is positively related to company size and industry (Financials) while the extent of web-based IR disclosure is significantly positively related to size, governmental ownership, institutional ownership, number of shareholders, and industrial type (Financials); however, it is negatively related to company age.

Disclosure Drifts in Investor Networks

This study develops a model to examine how companies' investor relations can impact the dissemination of information and how the dissemination of information affects the time-series behavior of bid-ask spreads. In our model, investors become aware of the information release either directly from investor relations or via person-to person communication. The person-to-person communication then spreads in a network of heterogeneous individuals, where some serve as 'hubs' with high connectivity to others. We show that the optimal investor relations strategy relies on targeting highly connected investors, especially for time-sensitive and complex information. We also show that targeted disclosure can reduce bid-ask spreads over long horizons, indicating a benefit in terms of lower trading costs. We also show that investor relations activities to expand the investor base facilitate the optimal information release by increasing the number of hub-type investors who follow the company and therefore receive the initial information release.

The fragile returns to investor relations: evidence from a period of declining market confidence

This paper assesses the capital market effects of investor relations activities during a period of high-profile corporate scandals. We find no support for the prediction that an established reputation for effective investor relations helped shield US firms from a perceived decline in management credibility and financial reporting integrity associated with Enron and related scandals. On the contrary, tests reveal that firms with an established reputation for superior investor relations activities fared worse on a series of market-related factors. Results suggest that distrust in corporate reporting practices spilled over to investor relations practices, and that best practice investor relations programmes developed during normal market conditions offered little protection from systemic declines in investor confidence arising from the corporate misdeeds of other firms.

Investor Sophistication and Disclosure Clientele

This paper explores the idea of disclosure clienteles. Disclosure clienteles refer to the ability of different types of disclosure activities to differentially benefit investors with varying levels of sophistication. Disclosure clienteles exist because variation in investor sophistication affects investors’ ability to utilize disclosed information, and thus their preferences for distinct disclosure activities. The paper utilizes cross-sectional variation in inefficient exercise activity in the options market to identify variation in sophistication (e.g., investors’ attention, knowledge, and expertise). The paper then presents empirical evidence consistent with disclosure clienteles. The results show that sophisticated investors concentrate their trading activity in firms that issue earnings guidance on a regular basis. This relation is stronger prior to RegFD, when sophisticated investors’ preferences for forecasting firms are predicted to be greater. Alternatively, less sophisticated investors are more prevalent in firms with increased levels of press-dissemination and superior investor relations activities (e.g., better access to information on the corporate website). These results suggest investors’ demand for disclosure is partially driven by their ability to utilize disclosed information.

A Descriptive Account of the Investor Relations Profession: A National Study

Despite being a practice of vital importance for corporations, investor relations commands little attention in scholarly research. The studies of investor relations from a strategic communication standpoint are almost nonexistent in the United States. At the same time, investor relations today is undergoing a major shift from financial reporting to building and maintaining relationships with shareholders. The article reviews literature to define the current body of knowledge and state of research in investor relations. Then, the article reports on a survey of Fortune 500 companies to identify major investor relations practices at corporations: investor relations activities, their target audiences, their place in organizational structure, the education of investor relations officers, and what problems investor relations officers face.

Does Disclosure Quality via Investor Relations Affect Information Asymmetry?

High disclosure quality can be achieved through an effective investor-relations program and results in firm benefits such as enhanced market exposure, increased analyst coverage and institutional following. We examine the association between disclosure quality and information asymmetry where a checklist was used to evaluate a firm's Internet-based investor-relations practices. Firms with higher disclosure quality through their investor-relations activities have higher analyst following, more institutional shareholders, more active trading, and are larger in terms of market capitalisation. Bid-ask spread decreased with increased disclosure quality, although the effect of investor relations was weaker in the presence of other factors.

Best Practices in Managing Investor Relations Websites: Directions for Future Research

ABSTRACT: This study aims to suggest areas for future research on the quality of Internet investor relations based on a structured analysis of investor relations activities within companies with a high-quality investor relations website. The study is based on six case studies and examines the organizational structure and processes behind four high-quality investor relations websites and two low-quality sites. The study shows that there are particular managerial practices within companies with high-quality investor relations websites, for six of the seven elements studied. These results indicate that future research on the quality of Internet investor relations should address variables that reflect differences in managerial capabilities and organizational structures with respect to investor relations activities. The relevance of such variables also has theoretical and methodological consequences for future studies. With respect to research on the development and maintenance of investor relations websites within the information management literature, our study shows that the design of investor relations websites has a number of specific features, which may provide useful insights that could be applied in the context of other websites.